In 2024, 13% of U.S. adults turned to nonbank services, such as check cashing, rising to 32% among the unbanked. For many, it's the only way to access wages, government benefits, or gig income without delays or hassles.
But speed comes at a price. Fees can range from 1% to 12% of a check's value, and fraud is surging – 65% of organizations reported check fraud attempts last year, with losses projected to exceed $24 billion by 2025.
Still, when paired with modern safeguards, check cashing can provide fast and secure access to funds for those who need it most.
In the sections ahead, we will cover how check cashing works, who uses it, and its key benefits and drawbacks.
What is check cashing and how it works?
At its core, check cashing is a service that instantly converts a paper check into cash for the payee, typically in exchange for a fee. Unlike depositing a check into a bank account (which may incur a hold of a day or more for funds to clear), check cashing provides immediate liquidity.
Despite the rise of digital payments, checks continue to play a major role in U.S. B2B transactions:
- 40% of B2B payment volume in the U.S. still relies on checks.
- 70% of businesses say they have no plans to phase out checks within the next two years.
That's why businesses offering check cashing need to understand both consumer needs and the companies still relying on checks.
Who offers check cashing?
If you’re wondering which businesses offer check cashing services in 2025, here’s a quick breakdown:
- Bank and credit union branches: Some banks now offer check cashing to non-customers. For example, PNC Bank charges a 2% fee for non-customers cashing checks over $25, while smaller amounts are usually free. Programs like this aim to serve the unbanked and eventually bring them into the banking system.
- Independent check cashing stores: These licensed businesses specialize in cashing checks, money orders, and occasionally payday loans. There are over 13,000 across the U.S., primarily located in low- to moderate-income areas.
- Retailers and grocery stores: Big names like Walmart, Kroger, and Publix offer check cashing at their customer service counters, usually for payroll or government checks. Fees are often low to attract shoppers.
Benefits to businesses offering check cashing
Here are the key benefits that check cashing can offer businesses:
Fee revenue adds up
Each transactions brings immediate income. Whether it's a flat fee (such as $5 or $7) or a percentage (typically 1% to 4%), these charges can quickly accumulate, especially in high-traffic locations.
For example, a $2,000 check cashed at a 1% fee generates $20 in low-risk revenue.
Unlike lending, businesses face no long-term exposure, they pay out funds immediately. While some states cap fees, most allow enough flexibility for sustainable profits.
More foot traffic, more sales
Retailers use check cashing as a magnet to get customers through the door. Once inside, shoppers often spend some of their cashed checks on groceries, gas, or other goods.
Walmart, for example, keeps check-cashing fees low to drive volume and boost same-visit purchases.
Banks benefit too: each check casher is a potential banking customer.
Access to the underbanked
Offering check cashing, especially to non-customers, can attract people without traditional banking access. It opens the door for financial institutions to introduce other services.
Once potential customers are there, staff can gently encourage them to consider other services.
Competitive advantage and loyalty
Few things matter more to customers than fast access to their money. Businesses that offer instant or same-day cash availability stand out, especially in areas where competitors require long holds.
Customers increasingly expect faster access to their money. If Bank A holds your check for two days but Bank B allows you to access it immediately (even for a small fee or under certain conditions), that's a powerful incentive to choose Bank B or to remain loyal to them.
Providing that kind of speed (even for a small fee) can improve satisfaction and reduce customer turnover.
Cross-selling and add-on revenue
Check cashing often leads to other transactions, such as buying money orders, reloading prepaid cards, or paying bills.
These services offer additional revenue opportunities and encourage repeat business. Financial institutions can also use these moments to recommend accounts, loans, or savings tools.
Community impact
There's a public-service angle too. Offering check cashing in underserved neighborhoods builds credibility and goodwill.
Banks that support financial inclusion through services like this often receive praise from local leaders, regulators, and the public. It's not just good PR – it fosters loyalty and trust that can grow over time.
Downsides of check cashing
Check cashing may offer speed and convenience, but it often comes at a high cost, especially for those who rely on it regularly. Here's why:
Higher fees than traditional banking
One of the most significant drawbacks is the cost. As of 2025, fees for cashing a check typically range between 1% and 12% of the check's value, with a national average of around 4.1%.
That means cashing a $1,500 paycheck could cost anywhere from $15 to $180, depending on the provider.
For someone who cashes multiple checks a month, those fees can easily add up to hundreds or even thousands of dollars per year – money that could otherwise go toward savings, bills, or debt repayment.
No federal insurance or customer protections
Unlike deposits made at a bank or credit union, checks cashed at nonbank providers aren't protected by FDIC insurance. If the check cashing service goes out of business, is robbed, or mishandles your funds, you're on your own.
There's also limited recourse for resolving errors or recovering losses in cases of fraud. Consumers have far fewer rights and protections than they would at a federally regulated financial institution.
Barriers to long-term financial inclusion
For low-income individuals, high check-cashing fees not only reduce take-home pay but can also prevent forward financial progress. Unfortunately, the high costs and lack of access to credit-building tools can keep these users locked out of the mainstream financial system. Instead of using a bank to build credit, earn interest, or grow savings, they remain in a transactional loop that offers little long-term benefit.
Limited access to broader financial services
Most check cashing outlets focus on single-use transactions, such as cashing a check, sending a money order, or paying a bill. Very few offer savings accounts, personal loans, or financial literacy tools.
As a result, users miss out on services that could help them manage money more effectively or build a financial safety net.
Without access to these options, many people remain vulnerable to unexpected expenses and often resort to high-interest payday loans when they are short on money.
Exposure to fraud and security risks
Relying on check cashing can significantly increase the risk of fraud, theft, and financial loss.
In 2024, the Financial Crimes Enforcement Network (FinCEN) reported over 680,000 suspicious activity reports related to check fraud, more than double the number filed in 2021.
Many of these cases involved fraudulent or altered checks, including forged endorsements and chemically "washed" checks with changed payees or amounts.
Check kiting schemes are also a growing concern, in which individuals exploit the delay between depositing and clearing checks to withdraw funds they don't actually have.
Additionally, walking away from a storefront with large amounts of cash can pose personal safety risks, especially in areas with higher rates of theft or robbery.
How to avoid check cashing risks
Here's how businesses are staying ahead of fraud with more innovative tools and safer processes:
1. Verify checks instantly with real-time tools
Forget calling the issuing bank – today's check verification happens in seconds.
Many companies now utilize real-time systems that instantly scan a check and confirm its validity. One popular method is Positive Pay, where employers send a list of issued checks to their bank for verification. When a customer presents a check at a retailer or teller window, it's scanned and matched to that list.
Suggested tool:
VALID System's Real-Time Loss Alerts scan each check instantly and alert staff when there's a high risk of it bouncing. The system catches over 75% of bad checks before they're cashed, quickly and without disrupting legitimate customers.
2. Use AI risk scoring to spot fraud
AI has transitioned from optional to essential in financial operations.
Advanced fraud systems now use machine learning to identify red flags that humans might overlook.
These systems evaluate dozens of variables in real-time – check amount, account history, check issuer, customer behavior, location, and even the time of day.
If something seems off (for example, a large check from a never-before-seen company or a customer far from their usual branch), the system assigns a high risk score and may recommend holding or denying the check.
Recommended Tool:
Valid Solutions' Behavioral Risk Engine analyzes dozens of real-time signals, like check size, issuer history, customer behavior, and location, to assign a risk score instantly. It flags suspicious checks before they're cashed and continues to improve with every transaction.
3. Detect and block duplicate checks before they clear
Fraudsters often attempt to cash or deposit the same check twice, typically via mobile deposit first, then again in person.
Modern duplicate-detection systems track key data points, such as check numbers, amounts, and account details, across institutions.
When a duplicate is detected, the system immediately flags the transaction and blocks any subsequent attempts.
Recommended tool:
VALID System's Inclearing Loss Alerts provides industry-wide monitoring and advanced duplicate detection during the clearing process, ensuring suspect items are flagged before they settle and helping institutions stop fraud that would otherwise go unnoticed.
4. Train staff to spot red flags early
Front-line awareness stops fraud before it starts. Train your employees to inspect every check and customer interaction with a fraud-first mindset.
Best practices:
- Teach how to detect tampering (e.g., discoloration, mismatched fonts, missing watermarks).
- Run fake ID spotting workshops using real-world examples.
- Train staff to notice suspicious behaviors (e.g., nervousness, coached responses).
- Educate on AML red flags, like multiple checks under $10,000 from the same issuer – common in structuring and fraud rings.
5. Monitor customer behavior to reduce repeat fraud
A structured customer tracking system, digital or paper-based, helps identify risky behavior patterns, prevent fraud rings, and enforce consistent policies.
Best practices:
- Record ID and transaction details for every customer to build a check-cashing profile.
- Capture biometric data (e.g., thumbprints) where regulations permit to support fraud investigations.
- Take and store customer photos during their first visit to deter identity misuse.
- Analyze frequency and check types – flag patterns like multiple third-party or high-dollar checks from non-payroll customers.
Action tip:
Review customer profiles weekly to spot outliers and apply limits proactively.
Turn check cashing into a secure, scalable revenue stream with VALID Systems
In conclusion, check cashing can be a practical and revenue-generating service when supported by proper safeguards. From increasing foot traffic to serving the underbanked, the business case is strong.
But the growing threat of fraud, regulatory risk, and operational strain makes modern protection essential.
VALID Systems equips banks, credit unions, retailers, and MSBs with the tools to offer secure, real-time check cashing without compromising speed or customer trust.
Core solutions purpose-built for check cashing operations:
- InteliFUNDS: Enables instant decision-making for up to 99% of checks and guarantees approved items. If a check later returns, VALID Systems absorbs the loss, not your institution.
- Real-Time Loss Alerts (RTLA): The system evaluates each check at presentment and flags high-risk items before cashing. This system identifies over 75% of likely charge-offs instantly.
- Behavioral Risk Engine: Uses advanced AI to analyze customer behavior and transaction patterns, assigning a dynamic risk score that evolves with each new data point.
- Inclearing Loss Alerts: Monitors duplicate presentments and detects fraudulent checks during clearing, catching issues that slip past frontline review.
Ready to turn check cashing into a secure, high-value service?
Contact Valid Solutions today and discover how our end-to-end fraud tools help you reduce losses, speed up service, and grow with confidence.